Phrase by 'Eugene Fama'
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After costs, only the top 3% of managers produce a return that indicates they have sufficient skill to just cover their costs, which means that going forward, and despite extraordinary past returns, even the top performers are expected to be only as good as a low-cost passive index fund. The other 97% can be expected to do worse.
Author: Eugene Fama - American EconomistGood , Past , Forward , Skill
The problem that people don't understand is that active managers, almost by definition, have to be poorly diversified. Otherwise, they're not really active. They have to make bets. What that means is there's a huge dispersion of outcomes that are totally consistent with just chance. There's no skill involved it. It's just good luck or bad luck.
Author: Eugene Fama - American EconomistPeople , Good , Luck , Chance
An investor doesn't have a prayer of picking a manager that can deliver true alpha.
Author: Eugene Fama - American EconomistTrue , Prayer , Manager , Alpha
With less regulation, I think you would see growth come back. Of course, there are situations where you need regulation. Antitrust regulation, for example, is a good idea because you want competition. But beyond that, it gets very difficult.
Author: Eugene Fama - American EconomistYou , Good , Competition , Growth
There's quite a bit of evidence that even professionals don't show any ability to pick stocks or to predict market rollbacks. Most of the people we identify as skilled based on returns have probably just been lucky.
Author: Eugene Fama - American EconomistPeople , Ability , Lucky , Predict
In an efficient market, at any point in time, the actual price of a security will be a good estimate of its intrinsic value.
Author: Eugene Fama - American EconomistTime , Value , Will , Good
Market timing doesn't work. If all the bubbles and all this mispricing really exist, how come so few people see it before it turns out that way?
Author: Eugene Fama - American EconomistSee , People , Work , Way
State constitutions typically provide that the state first has to service its debt, then make it pension payments, and then pay for services. What we don't know is whether that order will be enforced. And ultimately, the busted state is going to be looking to the federal government for a bailout. Think Greece, but on a much bigger scale.
Author: Eugene Fama - American EconomistThink , Looking , Service , Government
People don't walk away from their homes unless they can't make the payments. That's an indication that we are in a recession.
Author: Eugene Fama - American EconomistPeople , Away , Make , Walk
I'm an extreme libertarian, but I realize we're in a democracy, and in a democracy, people can have views of all stripes, and there's no reason to argue about it.
Author: Eugene Fama - American EconomistPeople , Democracy , Realize , Reason
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